Glenmark

elated inventory, all of which could have a material adverse effect on our financial conditions and results
of operations.
The regulatory framework in India is evolving and regulatory changes could have a material adverse
effect on our business, results of operations and financial condition.
Until January 1, 2005, India did not grant or recognize pharmaceutical product patents and we were able to
develop and sell some of our products in India and developing markets, although such products were
protected by patents in certain jurisdictions. The patent laws in India have since been amended and the
manufacturers are allowed to apply for patent protection for pharmaceutical products. These changes have
adversely affected the products we produce as well as significantly increased the competition we face. For
example, we were earlier unable to manufacture products, for which the patents had been filed on or after
January 1, 1995 and for which patents had been granted after December 31, 1994, without a license from
the patent holder. Typically, patents have a 20-year term and can be extended in certain circumstances. We
could lose market share and our financial condition and results of operations could be adversely affected
unless we could either develop our own patented products which did not infringe the patents of products
patented after 1995 or were able to obtain a license of such products from the patent holders. The position
has now changed and we are required only to pay reasonable royalty to the holder of a patent obtained after
January 1, 2005 and do not have to obtain a license from them. This is subject to our making a significant
investment in the product and our producing and marketing the product prior to January 1, 2005, up till the
date of the patent holder’s obtaining the patent. There is a possibility of the law changing again, or
reverting to the earlier position, which would adversely affect us.
The Government of India has formulated a draft National Pharmaceutical Policy, 2006, in which it has
recommended, amongst other things that patented drugs, such as formulations under product patents which
are launched in India after January 1, 2005, would be subject to price negotiations before granting them
marketing approval. The draft National Pharmaceutical Policy, 2006, has been circulated to various
interested parties to elicit their views on drug price control mechanisms. It is expected that the National
Pharmaceutical Policy, 2006 will be finalized after the consideration of the various comments and
suggestions received by the Government of India. Currently, it is not certain how the regulatory changes
envisaged by the draft National Pharmaceutical Policy will affect our operations, but any new regulation
may have a material adverse effect on our business. Additionally, if prices are fixed below those currently
prevailing, our operating revenues would be adversely affected.
The timing and content of any new regulation is uncertain and could be more extensive or restrictive than is
currently envisaged in the draft National Pharmaceutical Policy, 2006. As a result, our past financial
performance may not be indicative of our future results. In addition, on-going regulatory changes make it
more difficult to predict what the regulatory environment and market will be in the future and make it
difficult to plan for the medium and long term.
If we are unable to patent new products and protect our proprietary information, or if we inadvertently
infringe on the patents of others, our business may be adversely affected.
While our business has traditionally focused on non-patented products, in the past few years, patents have
become more significant to us. Part of our business and market strategy is based on developing and
introducing generic versions after third party products go off-patent, using non-infringing processes. We
also file and seek to obtain patents for new drugs and novel drug delivery systems under development. Our
success will depend, in part, on our ability in the future to obtain patents, protect trade secrets and other
proprietary information and operate without infringing on the proprietary rights of others. Our competitors
may have filed patent applications, or hold issued patents, relating to products or processes that compete
with those we are developing, or their patents may impair our ability to do business in a particular
geographic area. We have filed a total of 177 patents in India, the United States and under the Patent
Cooperation Treaty and have been granted ten patents. We cannot assure you that our pending applications
will be approved, or the patents we have been granted will result in development of products that will
eventually clear clinical research phases and achieve commercialisation. Any delays as a result of approvals
of pending applications or delays in development may also affect our business operations and financial
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